AmCham urges new government to address global competitiveness.
Following nearly a year of speculation, Danish parliamentary elections are finally here – and not a moment too soon. Essentially Denmark has been in political gridlock for most of the year, rendering it unable to effectively address the urgent economic challenges facing this great country. As the voice for International Business in Denmark, AmCham looks forward to engaging a new government - regardless of its color – blue, red or any shade in between.
Last week AmCham Denmark released its 2011 Business Barometer, an annual survey of CEO’s of multinational companies with activities in Denmark, gauging the current business climate and future trends in Denmark’s international business community. The survey looks at each company’s current investments and their views on labor demands and the factors that cause them to consider moving investments and jobs in and out of Denmark. Key findings of this year’s survey include:
- 47% of the surveyed companies expect to increase their Danish investments in 2012. However, 53% of the companies indicate that they have considered moving their investments outside of Denmark.
- The high cost of doing business in Denmark is by far the biggest challenge for multinationals. Of the companies surveyed, 78% of those who are considering moving jobs and/or investments out of Denmark, point to high costs.
- 40% of the companies consider Denmark's ability to attract foreign workers as poor or very poor. A competitive tax system and openness to foreigners are important areas to address.
Although we find it positive that so many of the multinational companies anticipate increasing their Danish investment, when 53% of the companies say they are considering moving their investments / jobs out of the country, there is reason for concern. The high cost of doing business in Denmark is a serious threat to jobs and investments, which politicians must take seriously. It is essential that government and business work together to identify long term, sustainable solutions and have the courage to implement them.
And just why should we be concerned with attracting and retaining multinational investments? The Danish economy is facing significant challenges, including a shrinking workforce and low growth in labor productivity, which have made Denmark poorer relative to other countries. Earlier this year, a report by Copenhagen Business School Professor Jan Rose Skaksen explored the potential for multinational enterprises (both foreign multinationals with subsidiaries in Denmark and Danish multinationals with subsidiaries abroad) to improve these conditions – an area which has been more or less neglected in the Danish debate.
The CBS report showed that although Foreign owned companies comprise just 1.2 % of Danish companies, they generate nearly 20% of the total number of private sector jobs and value added as well as 25% of Danish exports. In fact, if foreign owned firms employed the same fraction of the workforce as in Sweden, the Danish GDP would be 16 billion DKK higher than today. Additionally, Danish multinationals are making substantial investments abroad, including over 1.3 million employees, which is nearly equal to the total number of private sector employees in Denmark.
Multinational companies make decisions each and every day on where to best place their investments. Therefore, improving framework conditions for multinational companies in Denmark should be at the top of the agenda for a new government. And it won’t be easy – tough decisions must be made to improve Denmark’s competitiveness and the high cost of doing business in this country.
Regardless of the present economic situation it is a fact that the demographic changes facing Denmark in the long-term indicate a shortage of labor and a shortage of talent. We will be pushing for Denmark to implement a national strategy for attraction, development and retention of qualified talent. This requires not only qualifying, educating and motivating the domestic workforce, it’s also about openness to foreigners.
Finally we need the new government to provide a consistent and fair corporate tax environment in the years to come. AmCham Denmark looks forward to addressing these important issues together with a new government.
(This article was published in The Copenhagen Post on September 8, 2011)